Smoke Clears, Doubts Linger at CCTV Fire

Investigators are studying financial deals while trying to pin blame for a blaze that scorched a Beijing skyscraper last month.

By staff reporters Ouyang
Hongliang and Luo Changping

From Caijing
Magazine

A spectacular fire that
charred a 30-story building under construction in downtown Beijing may have
burned the cover off questionable financial deals tied to China Central
Television executives and its new headquarters.

While pursuing criminal
charges connected to the February 9 fire that gutted the Television
Communication Center -- part of CCTV’s new complex -- investigators have focused
on possible financial corruption involving high-level
executives.

According to a source, the
National Audit Office plans to look into the finances of several retiring CCTV
managers as well as the CCTV complex construction
project.

At the same time, questions
have been raised about the project whose costs ballooned from an initial
estimate of 7.7 billion yuan when it was approved by the State Administration of
Radio Film and Television in 2005 to the latest price tag of more than 12
billion yuan, not including equipment costs of more than 7 billion
yuan.

A key figure for
investigators is Xu Wei, the CCTV building construction project director who was
arrested shortly after the fire. Xu allegedly approved the Chinese New Year
fireworks show at the building site that officials say sparked the flames that
spread through the unoccupied building.

Xu, a 20-year veteran of
CCTV, was appointed the network’s technical department director in December 2000
and was named construction project director three years later.

Authorities also have
looked into Xu’s close friend and old college chum Li Xiaoming, who had served
as CCTV’s vice director. Li was questioned by police the night of the fire as
well as the next day.

A source said Li, unlike
Xu, has not been detained, and was seen at CCTV offices February
24.

Xu also worked as the legal
representative of a construction company in charge of the complex project called
CCTV Gauging, a joint venture formed in 2003 by CCTV and a building company
named Beijing Gauging Consultants Co. Ltd. In this capacity, Xu was handed
control of a 20 billion yuan CCTV construction
fund.

According to a preliminary
investigation, Xu earned a commission of about 80,000 yuan from CCTV’s purchase
of fireworks for the February 9 show, which was handled by the San Xiang
fireworks company. Caijing learned that a fireworks commission may be as high as
30 percent.

The network said the
holiday show cost 1 million yuan, but a source told Caijing the actual cost was
about 350,000 yuan. Similar displays cost 300,000 yuan in 2007 and 500,000 yuan
in 2008. A source said the same company every year sold the fireworks for CCTV’s
shows.

Police investigators found
the money used to purchase the fireworks was transferred to an account held by a
media technical company called Da Xin Heng Tai, for which Xu was the first legal
representative.

Da Xin Heng Tai was set up
in January 2006 with an investment of 5 million yuan from CCTV Gauging. It then
went through a fishy privatization. On April 12, 2006, CCTV Gauging transferred
Da Xin Heng Tai’s stock to another media company called Ying Xiang, which
provided CCTV advertisement services, consulting and training. But Ying Xiang
withdrew its investment after finishing two CCTV projects and transferred the
stock to five of Xu’s close friends, Caijing
learned.

According to Da Xin Heng
Tai’s public information, the company has managed at least seven CCTV projects
and received more than 100 million yuan in payments from the TV
network.

Pinning
Blame

Xu is one of 20 people
arrested so far in connection with the blaze, which killed a firefighter and
spread rapidly through the more than 103,000 square meter structure. CCTV blamed
the speed of the flames on insulation in the partially completed building.

Xu’s CCTV-hired lawyer is
raising questions over who’s to blame. In the lawyer’s opinion, key issues are
whether the construction company should take responsibility, whether the
fireworks display was based on an order from Xu or someone higher, and whether
the fireworks company should be held responsible for an illegal show using
illegally transported fireworks.

Nine San Xiang staffers
were among those arrested so far. Xu’s lawyer said the company illegally
transported fireworks and should take responsibility. Others say CCTV, which
hired the company, should be blamed.

A source close to the
investigation, who asked to remain anonymous, told Caijing defining
responsibility is difficult. But according to the preliminary investigation, the
order to launch the display came through official channels, not via an order
from Xu – a point supported by the fact that CCTV had arranged four cameras to
record the display for use in future TV programs.

The source said
investigators so far have been inclined to pin the major responsibility on CCTV,
while putting minor blame on others.

The construction company’s
culpability is also in question.

According to a fire
inspector’s report issued to CCTV before the fire, deficiencies were found in
eight of 26 areas probed at the building site. Despite the known risks cited by
inspectors, construction company officials did not try to interfere with the
fireworks display.

Uncertain
Future

The future of the
soot-blackened skyscraper, also known as the TVCC tower, is also in question.
CCTV released a private announcement to top managers February 13 saying that a
network-hired investigation team determined the tower could be
repaired.

The outermost walls on the
south and north sides were not damaged, the team found, and equipment inside the
south and north sides of the tower were unharmed. Moreover, the team said, the
building frame is intact.

However, neither fire
officials nor the construction company have commented on CCTV’s internal
assessment. An architect who asked to remain anonymous told Caijing he is
cautious about the announcement because there’s little possibility that outer
walls and equipment inside escaped damage entirely.

A source close to the fire
department said the six-hour fire may have heavily reduced the building’s
strength, which may make it vulnerable to earthquake risks. Another architect
said he would tear down the tower, if the choice was hit, since although a
repair job could save money, the building could be
hazardous.

The TVCC project cost CCTV
more than 2 billion yuan. But the building itself is registered as a 3 billion
yuan asset, since it included a 241-room luxury hotel and a cinema. The future
of each facility is now in doubt.

Meanwhile, CCTV Director
Zhao Huayong said the network would continue its plan to relocate offices to the
new complex – which includes other buildings untouched by the fire -- as
scheduled.

Zhao, 61, should have
retired last year according to Chinese regulations. He is currently overseeing
the post-fire aftermath of CCTV.

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